Trading Statement on Q3 200810/27/2008, 08:45 AM CET
Bonn: The global trading environment deteriorated markedly in the course of Q3 and as a result underlying EBIT (already excluding the Postbank result which is shown as discontinued operation) was around 8% below last year’s comparable result of €468 million. Year to date underlying EBIT is 1.3% ahead of the same period last year. Reflecting a positive EBIT impact of € 572 million from the repayment from the German government the reported group EBIT is up 26% from last years comparable number of
€ 1.68 billion.
The MAIL Division in Q3 saw EBIT developing broadly in line with the first half of the year and somewhat down year over year.
The EXPRESS Division has seen a similar slowdown in Q3 as is being experienced by its competitors, with overall underlying EBIT in Q3 declining by €30 million year over year. However, this result is heavily influenced by the on-going deterioration in the US. Outside the US, EXPRESS EBIT for the 9 month period is 11% above last year with a high single-digit growth rate in Q3.
In Forwarding air-freight volumes weakened in Q3, whereas we recorded double-digit volume growth in ocean-freight. As a result Forwarding/Freight continued to make double-digit earnings growth in Q3.
Supply Chain in its core activities maintained profit growth in Q3. Good progress was made in terms of new contract wins in our Supply Chain business. Our annualized wins so far this year amount to € 1 billion (vs. 885 million in the first 9 months 2007). Continuing progress was made in reducing the cost in ‚Corporate Center/Other’ also in Q3.
Adjusting for the € 1 billion repayment by the German government the operating cash flow made progress compared to the first nine months last year.
Given the high level of uncertainty about growth prospects as a result of the global financial crisis and weakening world economy we are reducing our guidance. Although underlying EBIT in the first nine months is still slightly up compared to last years we prefer to be cautious with our outlook and now expect underlying EBIT for 2008 of around € 2.4 billion, some 10% below last year’s result and 17% less than our previous guidance of around € 2.9 billion. The principal shortfall will arise in the Express division which is predominantly impacted by deteriorating market conditions in the US. We're also experiencing volume shortfalls in other regions but we can partially mitigate these through cost-cutting. Other divisions are likely to be slightly below previous guidance.
We now expect the world economy to enter a period of slowdown and even in some of the developed markets a recession which is likely to materially impact trading prospects for 2009. We are therefore withdrawing our previous guidance for 2009 and will issue fresh guidance when the economic prospects are sufficiently clear to make this possible. We do anticipate, however, making profit progress in 2009.
The full 9 months result will be released on November 10th. On that date we will also provide a full update on the progress of US Express restructuring and the next steps in our plan.The CFO, John Allan, will hold a conference call at 0930h CET today.